Introduction

Abstract

In 1935 the US secretary of labor Francis Perkins, in her speech “Social Insurance for the US,” introduced the government’s proposal for Social Security. Up until this point the elderly had largely been cared for in poor houses, run by local governments and charities, offering abject conditions. In her speech Perkins reported, “Enlightened opinion has long since discarded the old poor-house method of caring for the indigent aged.” Social Security law specifically targeted the elimination of poorhouses, excluding residents of public institutions from receiving federal money. This fostered a new for-profit nursing home industry, one of the first privatized social services in America. Approximately 80 years later, in 2014, the Veterans Health Administration (VHA) suffered a scandal in which administrators, incentivized to care for patients promptly, but given scarce budgets to do so, were found to have falsified data on waiting times. One might expect the response to be an increase in budget, changes in the incentivize system, and the dismissal of those who falsified data, but instead Congress allocated an additional $16 billion in funds, with only 6 billion going to the VHA itself and 10 billion going to a voucher program, to replace direct government provision with private medical providers. This story has been repeated countless times over the course of American social policy. Government social programs suffer setbacks, and regardless of the underlying problem, the solution is the replacement of government programs with services provided by the market.